Terra's Do Kwon is Being Investigated for Running a Ponzi Scheme!

According to South Korean media, Do Kwon might face charges for allegedly conducting a Ponzi scheme. Prosecutors are looking into whether Terraform Labs' CEO violated the law by promising unsustainable high interest rates on UST deposits using the Anchor Protocol. The Seoul Southern District Prosecutors Office, which is in charge of the investigation, is said to have assigned its Financial and Securities Crime Joint Investigation Team. Terraform Labs created the Anchor Protocol, a Terra-native decentralized programme that aimed to give a set 20% interest rate on UST deposits. It was intended to do this by redirecting the yield from interest-bearing collateral posted by borrowers to depositors or lenders.

When the excitement around the crypto industry began to fade in late 2021 and cryptocurrency values began to fall, it became unsustainable. Instead of decreasing the protocol's yield rate, it added $450 million to Anchor's UST holdings from its own treasury. Prosecutors might claim that these monies were obtained through LUNA investors. Kwon has already departed and relocated the majority of his liquid assets from South Korea.